UK smart city sector could be worth $40bn by 2020

9 October 2013
By Edd Gent
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Smart cities could save huge amounts of time, money and energy by integrating physical and digital infrastructure

Smart cities could save huge amounts of time, money and energy by integrating physical and digital infrastructure [Credit: Kume Sekki Co]

The smart city industry will be worth more than $400bn (£250bn) a year by 2020 and the UK could capture $40bn of this market, according to a new report.

Research carried out by engineering firm Arup for the Department for Business, Innovation and Skills to mark the launch of their new Smart Cities Forum has shown that the UK stands to take a 10 per cent cut of a $408bn global market in smart city technology.

But Volker Buscher, Arup director and author of the report, said a lack of a joined-up vision could hamper the UK's efforts to take a lead in the sector and the government must work with cities' businesses and academia to come up with a clear road map.

“I think currently we are missing a little bit of a vision that the principle stakeholders in this industry agree on,” he said. “I know it’s difficult when you have short-term problems, but if you never start to develop a vision you keep walking around in the dark and then you keeping heading in different directions.”

The concept of smart cities involves the integration of physical and digital infrastructure, so that data can be used to save money, minimise waste, measure usage of utilities or manage transport routes.

Smart systems will also allow the public access to real-time information that enables them to make more informed choices, such as planning a journey by checking for available room on trains and buses or even identifying car parking spaces before leaving the house.

“The next generation are not actually thinking about this as a change, they think about it as the reality in which they live,” said Buscher.

“The technology, in particular digital technology, we have now has become a force driving change in cities in its own right. Now we have technological capability available to us at costs we just didn’t have five years ago at the city scale or large scale.”

While the report found that the UK is in a good position to capitalise on this growing market, the report found that a lack of a broader vision has made it hard for companies to convince local authorities and utilities of the business case for untested technologies.

According to Buscher, in order to gain export credibility and attract inward investment, the UK needs to take risks and undertake large-scale demonstrations of smart technologies in its own cities.

“To be global leaders in this we will have to make some radical changes in the next year or two,” he said. “We need to get away from these trial projects which are a means to their own end; testing new technology in a city then when the test is completed your happy because the test worked. We need to have trials that can scale to city-wide roll outs.”

Science Minister David Willets welcomed the research and pledged that the Smart City Forum, which he will chair alongside Cities Minister Greg Clark, will help tackle the issues raised in the report.

“Our aim as the government is that Britain should be at the forefront of developments on smart cities and we should become a global hub for smart city solutions,” he said.

“I think we have got some fundamental sources of competitive advantage. We are already doing some of the right things and the Smart City forum is a way of ensuring we do more.”

The forum will be made up of representatives from cities, business, and academia and has been set up in response to the government’s Information Economy Strategy released in June.

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